Insurance Policies: What Employers Need to Know

Liability Insurance

As its name infers, liability insurance covers you for situations in which you may be found liable for someone’s injuries. If a customer gets hurt inside your store, your liability insurance would cover your legal costs in the event of a lawsuit. Similarly, if you or a representative of your company cause damage to someone else’s property, your liability insurance would cover that as well.

Some types of businesses require specialized liability insurance coverage. For instance, doctors, lawyers and accountants should have malpractice insurance, which will protect them in the event someone sues them for failing to meet their profession’s standards of conduct. Any business that has a fleet of cars, trucks or vans will need to have automobile liability coverage. Some types of nonprofits and corporations may require directors’ and officers’ liability insurance, which covers any legal actions against the entity’s directors or officers. Finally, some types of businesses may want to have errors and omissions insurance, which indemnifies them from liability in the event of an inadvertent mistake.

Property Insurance

In the event that your commercial property is damaged by a storm or by a fire, property insurance will pay for any repairs or even replace damaged property. Typically property insurance will cover your building and grounds, your office furniture and equipment, your inventory and any fixtures such as lighting and flooring.

While the minimum coverage may be enough for some types of businesses, you may wish to consider adding additional protections to your property insurance policies. For example, if you rent your space, your landlord will likely require you have tenant’s insurance to cover any damages caused by you or your employees. Business interruption insurance will cover your expenses and reimburse you for lost revenue should you have to temporarily close your business for any reason. Crime insurance will cover any lost or stolen property.

Workers’ Compensation

Almost every state requires employers to carry workers’ compensation insurance if the company has a certain number of employees. Should an employee be injured during the course of his or employment, workers’ compensation insurance will cover the employee’s medical costs and lost wages. It does not matter who was at fault for the injury; the employee will get paid and the employer is protected against being sued.

Determining How Much Coverage You Need

You will want to make sure that you purchase the right amount of insurance for your business. Being underinsured could leave you open to losses that could potentially put you out of business. Being over-insured means you could be throwing money away that your company could use for something else. Having an accurate idea of all of your business’s assets can help you determine how much it would cost to replace them, and therefore how much insurance you will need. Some companies also choose to purchase umbrella insurance, which is basically an extension of your liability insurance. If a claim is filed that exceeds the upper limits of your policy, umbrella insurance provides you with additional coverage above and beyond your base policy.

Shopping for Policies

While there is a lot of information available online, many business owners choose to work with an insurance broker who will shop around for policies on the business owner’s behalf. If you choose to work with a broker, make sure he or she has a deep understanding of your business and its insurance needs. Many policies can be purchased as a bundle, which may be a good way to save money. However, a one-size-fits-all type of policy is not appropriate for every company, and some businesses may benefit from a more customized approach. Before purchasing a policy, you should always review it to make sure you understand the coverage limits, what deductibles you will be responsible for and the process for filing a claim should the need arise. Also keep in mind that your business may change and evolve over time, so it may be a good idea to review your policies when they come up for renewal each year to make sure that more or less coverage is not needed.

Every business owner should take the time to analyze his or her company’s needs and ensure that the correct forms of insurance coverage in place. This will ensure that the business is protected from suffering a serious financial loss.